Although Merriam-Webster defines grantsmanship simply as “the art of obtaining grants,” the reality is so much more than that. A broader, more realistic (somewhat dramatic) definition of that term would be, “The cradle to grave process for ‘birthing,’ ‘raising’ and managing grants.”

Regularly, on this blog, I will share my experiences, real world examples, and other resources to help you develop or expand a grants program for your nonprofit.

So, as promised, in this, my first post focusing on grantsmanship, let’s look at some real world examples…

The Good: According to a 2010 WealthEngine white paper, “Measuring Fundraising Return On Investment and the Impact of Prospect Research,” the average cost-per-dollar-raised for grants is 20 cents … an ROI of 500%. For each dollar raised for direct mail donor acquisition the cost is over a dollar, and it’s often fifty-cents-per-dollar-raised for special events. Clearly, grant seeking can result in a good return on investment … when managed well.

The Bad: If your financial statements and program budgets are not in order, then you’re not ready to start a grants program. Many grantors will scrutinize your financials with a magnifying glass, and if your books are not in total order, don’t expect to be awarded a grant.

Take the case of New Jersey’s application for a U.S. Department of Education “Race to the Top” grant. According to an August 31, 2010 article in The Trentonian, New Jersey “lost crucial points in reporting budget figures for the wrong years in one section of its application.”

The article stated that New Jersey “was a top runner-up in the competition, missing by only a few points.” This financial gaffe cost New Jersey a $400 million federal education grant, and it cost New Jersey’s education commissioner, Bret Schundler, his job.

The Ugly: Grants are NOT a no-strings-attached gift – they are a contract between the grantor, who provides the funds, and the grantee, who performs the tasks and delivers the outcomes described in the proposal. OK, maybe this isn’t The Ugly. It’s just reality. But, if the grantee fails to deliver, it can get ugly, really ugly.

Take the case of the Center for Civic Education (CCE). CCE received grants during FY08 from the U.S. Department of Education to facilitate civic education. The DOE conducted an audit to determine whether CCE administered the grants in compliance with applicable laws, regulations and grant award provisions.

The audit findings were really Ugly, ranging from, “Not meeting the standards for administering federal education grants,” to, “Charging costs that were not reasonable, necessary, or allocable to the programs.” Needless to say, the DOE was not happy, and “recommended” that CCE return over $925,000 that they’d spent in FY08, and that CCE be designated a “high-risk grantee” … subject to special grant conditions.

By the way, the audit and CCE’s response offer some very interesting reading:The AuditCCE Response
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Hank Lewis with Development Consultant Associates has over thirty years as a fundraising consultant and is a specialist in Board and Leadership Development, Capital Campaign, Bequest Program and Major Gifts. [Read more ...]